What is Making Tax Digital?
Making Tax Digital (MTD) is HMRC’s initiative for businesses and individual taxpayers to be able to access their own tax affairs online via digital tax accounts.
HMRC’s main aim of Making Tax Digital is to make tax administration more effective, efficient and easier for taxpayers through the implementation of a fully digitalised tax system by 2020, whilst also reducing its overheads for managing tax affairs.
The transition will change the way your deal with your sole-trade, limited or personal taxes – as tax-returns, payments to HMRC and all financial records will need to be done online.
Small businesses, sole traders, self-employed people and landlords will be required to start using the new digital service from April 2018 if they have profits chargeable to income tax and pay class 4 National Insurance contributions (NICs).
Digital tax accounts for all will mean that customers can see the information that HMRC holds and be able to check at any time that their details are complete and correct. HMRC will use this information to tailor the service it provides, according to each of our customers’ individual circumstances.
Digital Tax Accounts
One of the new features of MTD is the digital tax accounts. There are Personal Tax Accounts and Business Tax Accounts. If you have income taxed under PAYE and are also self-employed or have rental income, and the total of your self-employment and rental income is under £10,000 then you will no-longer need to complete a tax return.
Instead, you will use the tax code provided to you by HMRC to update them of any tax liability due to be paid.
What is the timeline for Making Tax Digital?
Based on the information published by HMRC, at the end of the current financial year, on 5th April 2018, the self-assessment tax returns will be replaced by digital tax accounts. Currently as per HMRC the timeline stands:
- April 2018 – Making Tax Digital Go Live – Income Tax
- April 2019 – Go Live – VAT
- April 2020 – Go Live – Corporation Tax
How can we help?
Here at Brayan and Spencer Associates, we understand the challenges our clients will face during the transition of their tax affairs to MTD.
Our team is keeping up to date with any Tax Digital announcements and changes.
Our team of experienced accountants are here to help you with transition and offer you their experience and expertise.
Under the new Making Tax Digital, as your agents, we will have “Agent Access” which will enable us to prepare and submit your digital tax accounts and return online on your behalf.